WT Business Beat

By Nick Wakeman

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Nick Wakeman

Small business size calculation rule now in effect

The Small Business Administration has finalized new rule changing how it calculates whether a small business is indeed small.

The rule went into effect Jan. 6. SBA will now use a five-year average of revenue to determine a size standard instead of three years.

Detractors claim the change will actually hurt small businesses, claiming these contractors will lose their designation more quickly and be thrown into the full-and-open world before they might be ready.

This change was mandated by the Small Business Runway Extension Act of 2018.

Supporters of the change say it will bring more consistency across the government. They also take the opposite view and believe that the longer period will actually help small businesses better transition to the full-and-open environment.

Small businesses competing for unrestricted contracts is a challenge that has long vexed the government market. Companies take advantage of set-aside contracts, which help them outgrow the small business designations.

Then they struggle. Some are acquired, but many disappear or shrink back into the small business category.

Time will tell whether this change helps. But it is unlikely to solve the dilemma.

Posted by Nick Wakeman on Jan 13, 2020 at 1:06 PM


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